Full Featured No Maintenance Urban Living Looks to Be Winning Out

Jun 19, 2024

Belpointe OZ Offers A Luxury Alternative To Soaring Home Ownership Costs

In our experience, the choice between owning a mediocre home in an overpriced market versus going out of pocket for similar cost of living expenses to rent a luxury full-featured downtown apartment is becoming a point of contention for many want-to-be home buyers. It seems to us that sellers in the most price-sticky markets are not feeling the need to discount home prices, likely because the narrative of the economy skating a recession is still at work.

According to the most recent REALTORS® Confidence Index Survey the median number of days a house stayed on the market fell to 26 in April from 33 in March, with all cash sales remaining constant at 28%. In our mind, this is a clear indication that the fever to buy a house at whatever cost and at whatever borrowing rate by first time home buyers and move up buyers remains high.

In addition to the ongoing purchase price squeeze within some of the most desirable communities in some of the strongest employment and population growth markets, a recent study by Bankrate found that the cost of owning a single-family home in the U.S. on a national basis has climbed 26% since 2020, as expenses that include property taxes, home insurance, and utilities have jumped during a sustained period of higher inflation.

Adding to the fever pitch, the most recent Bureau of Labor Statistics (BLS) employment data for May showed a robust increase in non-farm payrolls of 272,000, well above forecasted estimates that ranged from 120,000 to 258,000, supporting the view that labor markets remain tight and, we think, an even tighter housing market despite the rise in prices and the soaring cost of homeownership expenses. In our view, the selloff in Treasuries in the wake of the BLS report clearly showed the Fed’s concerns about inflation are a long way off from being placated.

We think, instead of chasing upward home values that seem to be exhibiting hallmarks of being priced to over-perfection within some of the most optimal markets, one can argue that opting for a luxury apartment in a Class-A full-featured multi-family residential community located within select downtown districts and offering some exceptional amenities, makes better sense of the current situation and better use of income dedicated to the cost of shelter. According to Bankrate, he national average for a fixed-rate 30-year mortgage as of June 17th is 7.01%.

Zoom into Sarasota, Florida, where there is a healthy job market, attracting a number of higher-salaried workers. We believe that residents like these will look for a downtown Sarasota living situation, close to work, the best restaurants, bars, entertainment venues, the beaches, and the airport.

By choosing downtown Sarasota, new residents would be close in proximity to work, historic landmarks and downtown events, have excellent access to transportation, dining, entertainment, views of the coast, abundant shopping and convenience, with an incredibly short ride to world famous St. Armand’s Circle, Siesta Key, Lido Key and Longboat Key.

It is also why we at Belpointe PREP, LLC (“Belpointe OZ”) (NYSE American: “OZ”) took it upon ourselves to develop Aster & Links, a luxury apartment complex in the heart of downtown Sarasota, styled after big city feature-studded living residences, within a federally designated opportunity zone. Located at 1991 Main Street, Sarasota, Belpointe OZ’s flagship community started receiving its first residents in late May and we think offers an amazing living experience for those seeking a five-star residential secure place to call home.

Investors and future tenants can now preview and lease the available units and floorplans on the updated Aster & Links website, which displays the luxurious layouts with living spaces from 865 to 2,820 sq. feet, one-bed/one-bath to four-bed/three-and-a-half-bath and a wide array of options to fit the needs and wants of all future tenants.

As of May 31, 2024, Belpointe OZ, the only publicly traded qualified opportunity fund, announced its unaudited quarterly net asset value (“NAV”) as of March 31, 2024 of $361.66 million, or $99.59 per Class A unit. As of June 14, 2024, Belpointe OZ’s Class A units trade at discount of just over 40% to NAV. In our view, investors seeking a discounted real estate investment opportunity should consider exploiting the disparity between the current market price of Belpointe OZ’s (NYSE American: “OZ”) Class A units and its NAV, notwithstanding the tax benefits that Belpointe OZ, as a Qualified Opportunity Fund, has to offer investors who reinvest capital gains.

It remains our view that the market fails to price in the fact that Belpointe OZ owns Aster & Links, a major asset that is currently projected to be stabilized in the next 12+ months and has the potential to generate substantial cash flow. What’s more, investors do not need capital gains to take advantage of the NAV-to-Class A unit price disparity.

However, without investing capital gains investors will not qualify for any of the Opportunity Zone program tax benefits. But, we would argue, with stock market gains being what they are year-to-date, locking in capital gains and sheltering those gains through the purchase of Belpointe OZ units is a strategy that is worthy of consideration.

Belpointe OZ

255 Glenville Road

Greenwich, CT 06831

T: (203) 883-1944

E: IR@belpointeoz.com

The information in this communication is for illustrative, educational and informational purposes only and is subject to change. Nothing in this communication is or should be construed as an offer to sell or the solicitation of an offer to buy any securities. Offers may only be made by means of a prospectus.

Belpointe PREP, LLC (“Belpointe OZ”) has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Prior to making an investment decision, you should read Belpointe OZ’s prospectus and the other documents that it has filed with the SEC in their entirety, and carefully consider its investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in the offering. Copies of these documents can be obtained free of charge from www.sec.gov or investors.belpointeoz.com or from any broker-dealer participating in the offering.

The information in this communication should not be relied upon as investment or tax advice. You should consult with your own investment and tax advisers concerning the federal, state and local income tax consequences of purchasing, owning or disposing of securities in the offering, and of Belpointe OZ’s election to qualify as a partnership and qualified opportunity fund for federal income tax purposes. There is no guarantee that Belpointe OZ will continue to qualify as a partnership or qualified opportunity fund.

Past performance is not an indicator or a guarantee of future performance. An investment in the offering to which this communication relates involves a high degree of risk, including a complete loss of your investment, and may not be suitable for all investors. The price of Belpointe OZ’s securities will fluctuate in market value and may trade above or below net asset value. Brokerage commissions and expenses will reduce returns.

The offering to which this communication relates is being made on a best-efforts basis on behalf of Belpointe OZ through Emerson Equity, LLC, Member FINRA, SIPC, as managing broker-dealer.

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